(Alliance News) - Oil field services firm John Wood Group PLC on Thursday withdrew its 2019 final dividend due to the uncertainty caused by Covid-19.
John Wood declared the 23.9 US cent final dividend last month when releasing results for 2019. However, given the "unprecedented" uncertainty, this will now not be paid.
The company said this move will protect cashflow and "preserve long-term value". The dividend will be reviewed once conditions normalise.
The order book, John Wood added, was USD8.0 billion as of the end of February and some 70% of 2020 activity is delivered or secured.
Going ahead, some of this order book is likely to be postponed and new order intake will slow due to the crash in the oil price prompted by Covid-19 and a price war between Saudi Arabia and Russia.
John Wood is reducing executive and senior staff salaries by 10%, with another unspecified group of employees doing the same. This will save around USD40 million a year.
The firm also is furloughing staff temporarily, reducing headcount, and implementing unpaid leave and operational salary reductions.
It is reducing capital expenditure by around USD20 million to USD25 million, and cutting other costs.
John Wood stressed it has a "strong" balance sheet and "considerable" headroom against debt facilities. It has access to bilateral term loans of USD300 million, a revolving credit facility of USD1.75 billion, and US private placement debt of USD880 million.
The private placement debt matures between 2021 and 2031, with the first maturity of USD77 million in late 2021. The other facilities mature in May 2022.
Shares were 7.6% higher on Thursday morning in London at 159.90 pence each.
By George Collard; georgecollard@alliancenews.com
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Wood Group (J) (WG.)